Reaction to the introduction of the iPad mini yesterday was decidedly mixed. On the one hand, many Apple faithful praised the launch of the new tablet, which is half the weight of the third and fourth generation iPads, and can be palmed with one hand. On the other hand, many complained that it was simply a shrunken down iPad 2 with the same lackluster screen resolution. It also didn't help that many people felt that the 16GB iPad mini was overpriced at $329.

With all the criticism of the iPad mini's pricing and specs, Apple' Phil Schiller has come to the rescue to defend Apple's newest tablet entry.

"The iPad is far and away the most successful product in its category. The most affordable product we've made so far was $399 and people were choosing that over those devices," said Schiller in an interview with Reuters.

"And now you can get a device that's even more affordable at $329 in this great new form, and I think a lot of customers are going to be very excited about that.”

Schiller believes that the $130 price premium over some competing tablets is worth it, and that the iPad mini will sell on its merits alone, not needing to compete on price. Apple points to the fact that the iPad mini is lighter, thinner, and has better built quality than the plastic-clad competition. And of course, Apple also points to 275,000 tablet-specific apps for the iPad platform versus a plethora of "stretched phone apps" for Android devices.

quote: it doesnt matter why - if you going to make a tablet then you have to compete against the nexus 7 price tag.

It's just not the case. Apple has never competed with the low-ball price tags of desktops, laptops, phones, or tablets. They just don't have to. Not everyone buys the cheapest thing out there, it's just that simple. Losing money on the initial sale only to make it up later in secondary purchases has been tried countless times before in many industries and rarely does it stick because the companies taking the losses can't do so forever.

Apple's sales certainly aren't being crushed by Amazon/Google. Apple doesn't have to cut its price until that happens, if ever. That's the free market. An item is worth as much as people are willing to pay for it, and at this time, that price is of Apple's choosing.

The most obvious successful story of this model (besides the razor blades) would be the game consoles. But consoles were dealing with licensing fees and royalties on ~$60 games. At an average of $1 for an app, making significant revenue with this scheme is going to be a lot harder. So far Amazon's doing okay. I haven't heard any reports on the Nexus 7's sell through rate on media though.